Market Surveillance Department
The Market Surveillance Department is responsible for maintaining an orderly market and enhancing market transparency and integrity. The department's primary duties follow:
- Manage information disclosure of listed companies
Listed companies are obligated to disclose any material information to investors and other stakeholders through the SET Information Disclosure System. This requirement ensures that all investors are treated fairly and equitably. When material information is not disseminated via SET and is likely to influence stock prices (e.g., rumors concerning mergers and acquisitions, or management's revealing a firm's current net income), the Market Surveillance Department will immediately ask the company for confirmation/clarification and request it to issue material, accurate, and adequate information on the matter at hand to all investors via SET. This ensures that all investors have equal access to information and prevents insider trading.
- Monitor trading of securities and derivatives
The Market Surveillance Department is responsible for preventing trading irregularities and/or the placement of inappropriate trading orders, or other infractions of securities trading regulations that could adversely affect the stock market. If the department suspects that improper trading and/or other irregular activities have taken place that violate the Securities and Exchange Act B.E. 2535 and/or the Derivatives Act B.E.2546, it shall refer the matter to the Securities and Exchange Commission (SEC) for further investigation and disciplinary actions. Such violations include:
Misstatement – Spreading rumors or false information with the intention of misleading others about a listed company or the pricing of securities.
Insider trading – The buying or selling of a security by an individual who has access to material information about the security when such information is still nonpublic. Trading while having special knowledge is unfair to other investors who don't have access to the knowledge.
Market manipulation – Trading securities with the intent to distort the market of a given security as to price and/or quantity of shares traded so as to mislead others and to profit from the fraudulent trading. Market manipulation can include inflating the price of a security, deflating the price, maintaining an artificial share price, or simultaneously placing buy and sell orders that cancel each other out but that give the perception of higher trading volumes.
Monitoring securities trading
In order to ensure fair trading, SET has implemented the Warning Abnormal Trading & Catching Hostile System (WATCHs) to continuously track and monitor securities trading.
WATCHs can monitor trading and track trading conditions in real time; in addition, the system permits searching, compiling, and displaying historical data within specific time periods. For example, WATCHs has the capability to:
- Display real-time overviews of both market indices and trading data of individual securities including price changes and trading volumes.
- Display alerts for individual securities when abnormal movements of price and trading volume occur compared to past statistical characteristics of that security.
- Find both real-time and historical trading conditions of securities when irregularities are detected.
WATCHs plays an important role in allowing officials to monitor securities trading in real time, which assists in preventing and suppressing unfair trading in a timely manner. WATCHs is recognized globally as an efficient and effective trading surveillance system.
The Market Surveillance Department consists of three subunits.
- The Securities Surveillance unit monitors securities trading in real time and conducts preliminary investigations. When any abnormal price movements or securities trading volumes are detected without recent information accounting for such changes, and if evidence is discovered suggesting wrongdoing may have occurred, then an in-depth investigation will be conducted.
- The Derivatives Surveillance unit is responsible for monitoring derivative trading activities and conducting preliminary investigations. When irregularities are found, the unit will determine whether the derivative price is moving in the same direction as the underlying commodity index and/or if there is clustered trading. If it is found that trading behavior is indicative of violations of derivative market regulations or laws, an investigation will be conducted.
- The Investigation unit is responsible for scrutinizing both securities and derivatives trades if it is believed SET rules, the Securities and Exchange Act B.E. 2535, and/or the Derivatives Act B.E.2546 have been violated. If there are grounds to believe that an offense has been committed, the matter will be referred to the Securities and Exchange Commission (SEC) for further investigate and disciplinary action.
When there is evidence that material, nonpublic information has been utilized for insider trading, the Market Surveillance Department will investigate a range of past dates to determine whether any person defined as an insider by law bought or sold a security for his/her own profit. If insider trading appears to have occurred, SET shall refer the matter to the Securities and Exchange Commission (SEC) for further investigation and disciplinary actions.
The Market Surveillance Department continually monitors trading patterns indicative of share price manipulation throughout trading sessions. If there are abnormal movements such as sharp increases in price or in trading volume which cannot be explained by accessible market information, and if the department detects suspicious trading patterns, a preliminary investigation will be conducted to find violations of market manipulation laws. When the preliminary investigation reveals a high probability of unfair trading, the case is sent to SEC for further action.